G20 Finance Ministers meeting – Fukuoka, Japan – Communiqué and OECD report

Finance Ministers and Central Bank Governors met in Fukuoka, Japan on 8 – 9 June which will be followed by the Leaders’ Summit on 28 – 29 June. At the end of the 8 – 9 June meeting a communiqué was issued.

There is a paragraph devoted to taxation issues which is largely unchanged from the equivalent paragraph in the communiqué issued in December 2018 after the Leaders’ Summit in Argentina.

“We will continue our cooperation for a globally fair, sustainable, and modern international tax system, and welcome international cooperation to advance pro-growth tax policies. We reaffirm the importance of the worldwide implementation of the G20/OECD Base Erosion and Profit Shifting (BEPS) package and enhanced tax certainty. We welcome the recent progress on addressing the tax challenges arising from digitalization and endorse the ambitious work program that consists of a two pillar approach, developed by the Inclusive Framework on BEPS. We will redouble our efforts for a consensus-based solution with a final report by 2020. We welcome the recent achievements on tax transparency, including the progress on automatic exchange of financial account information for tax purposes. We also welcome an updated list of jurisdictions that have not satisfactorily implemented the internationally agreed tax transparency standards. We look forward to a further update by the OECD of the list that takes into account all of the strengthened criteria. Defensive measures will be considered against listed jurisdictions. In this regard, we recall the 2015 OECD report inventorying available measures. We call on all jurisdictions to sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters. We continue to support tax capacity building in developing countries, including coordinating through the Platform for Collaboration on Tax (PCT) and by applying the experience with medium-term revenue strategies and tailoring efforts to support domestic resource mobilization in countries with limited capacities. We welcome the first progress report of the PCT, as well as the Asia-Pacific Academy for Tax and Financial Crime Investigation in Japan.”

OECD report to the G20 Summit

As is now the norm there was a long, 126 page report, from OECD about progress on the various tax initiatives on which OECD is currently engaged at the behest of the G20 OECD Secretary-General Report to the G20 Finance Ministers and Central Bank Governors

A key current issue is the work towards an agreement for a new system to tax the digitalised economy and the report notes:

“When I delivered to you the interim report on the tax challenges arising from digitalisation in March of 2018, the landscape was characterised by division. Today, because of your political will and your leadership, countries are working together and have agreed on a programme of work to deliver, by the end of 2020, a solution to these challenges. The aim is to overcome the obstacles that jurisdictions face in trying to tax the profits that multinational companies earn from users and consumers located in those jurisdictions, particularly where the companies are not physically present in those markets. They have also agreed to work on mechanisms so that companies would see their profits taxed at some minimum levels. In January, the 129 members of the Inclusive Framework agreed a policy note that identified the contours of a solution based on two pillars – one addressing the reallocation of taxing rights (Pillar 1) and the other based around a minimum tax to address the remaining BEPS issues (Pillar 2). Today, the programme of work to deliver a solution by the end of 2020 is submitted to you for endorsement. These are complex and difficult questions and in particular, the gaps to find a unified approach in Pillar 1 will have to be bridged. This will require political leadership of the G20 to forge the way to a global, consensus-based, long-term solution in 2020.”